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JLT talk about BIM within the UK Construction Industry

12 September 2016

The UK construction industry contributed £103 billion to the economy in 2014 and employed around 2.1 million workers. To maintain this key position the government has set out plans to create a world-leading position in building information modelling (BIM).

BIM is a digital technology process that allows work to be contracted collaboratively. It uses real-time building modelling software in 3D, 4D, or increasingly 5D, with key product and asset data embedded, to increase productivity and efficiency, save costs and reduce running costs after construction.
The degree of collaboration is defined by three BIM levels which range from 2D and 3D modelling for concept work and documentation to full integration between all disciplines and contractors via a single, shared project model.

The vast majority of projects in the UK are currently at BIM level 1, some are at level 2 but level 3 lies somewhere in the future. The benefits are obvious; improved efficiency throughout the project life cycle as well as enabling parties to identify potential challenges before work begins.

But the whole concept rests on the exchange of information which raises questions about liability. Where, for instance, a contractor makes an error relating to BIM and a liability arises, would a professional indemnity policy respond if there are no specific exclusions relating to BIM? This may depend on the quality of the information disclosed to insurers. In addition, , questions remain over who owns the BIM model and how it is insured, together with intellectual property rights and software compatibility.

Some risks associated with BIM will sit under professional indemnity policies. These will provide some cover for liability for losses but, as most of these policies are based on the premise of professional service, contractors may need to look at their policies to ensure that BIM-hosting activities fall within this definition.

Certainly, when we arrive at level 3, a more collaborative approach to contracting will be needed as well as greater sharing of risk and reward. The structure is likely to be similar to that of alliance contracts, where risk is shared between the employer, contractor and consultants. This this is an area where the insurance industry has a lot to offer in terms of best practice and risk transfer products that can facilitate contractual solutions.

Responsibility

Under BIM, non-disclosure agreements will be a vital component in protecting intellectual property. The main contractor hosting the system will bear the greatest responsibility and this needs to be properly clarified. However, there is a lesser liability for all parties with access to the system to ensure the information is secure. An appropriate BIM protocol may address some of these issues. This is a supplementary legal agreement often with bespoke wording, incorporated into construction contracts. Other issues include the liability of individuals, such as an information manager in charge of the process of information exchange and responsibility for the security of the BIM model.

Responsibility for additional costs that result from a model being incorrect and the risk of errors and omissions would appear to lie with the author. But contractors need to clarify the role they intend to play in relation to management and coordination of the BIM model and communicate this to insurers.

Insurers are likely take a positive view of the use of standard industry controls in the delivery of BIM. But a key challenge comes with the variability of BIM capability within the supply chain. That may be overcome through better communication with stakeholders to provide insight into practices and culture.

Embracing BIM is a major step forward. It will remain a fluid situation for some time and it is vital for all parties to maintain a disciplined risk managed approach throughout with increased consultation with brokers and insurers.

For further information, please contact David Cahill, Construction Business Development Leader on +44 20 7558 3482 or email david_cahill@jltgroup.com

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Jardine Lloyd Thompson Group plc

Jardine Lloyd Thompson Group plc, incorporated and registered in England and Wales. Registered Office at The St Botolph Building, 138 Houndsditch, London, EC3A 7AW. Registered number 1679424. Jardine Lloyd Thompson Group plc is a holding company, some of whose subsidiaries are authorised and regulated by the Financial Conduct Authority.